Take a quick look across the global map and the economic climate is bound to cast a shade of gloom. The aftermath of the financial crisis has shaken economies in all regions of the world, and the fiscal health of many nations is beginning to give rise to significant economic uncertainties.
Let us start with the US. The US economy is grappling with unemployment rates north of 9%, a fiscal deficit that seems out of control causing credit agencies to threaten downgrading the credit rating of the US government bonds, and a housing market that remains reluctant to bounce back. Inability of the US government to deal with their fiscal woes is likely to have 'catastrophic consequences', according to the US Treasury Secretary. The global engine of growth seems to be running out of steam. And the international currency of global trade seems to be tethering on the brink of losing its shine. Clearly, all is not well.
Let us turn to Europe. Greece is going to default on its debt obligations - it is no longer a question of if but one of when. Portugal, Spain and Ireland have already made it to the hog list and are struggling to cope with the economic challenges with no sign of a recovery plan. Italy is the latest to join this bandwagon.
Its debt burden, at 120% of GDP, has reached alarming proportions and despite the presence of large and well-established global companies, the country's debt has caused economists to start questioning the viability of the eurozone economies. The health of the French economy is beginning to show signs of worry. Germany is the lone frontrunner in this race for survival. And a recent Deloitte Survey of UK-based CFOs indicate that the pessimism over the future health of UK businesses has bounced back on the list of worrisome factors to watch out for.
Enter China. Serious concerns about domestic inflation within China have caused its central bank to raise the bank's reserve requirement for the ninth time since October 2011 to 21.5% in June 2011.
Lending in China declined to the slowest pace since 2008 and the country reported its first quarterly trade deficit of $1.2 billion since 2004 in the first quarter of 2011. Again, the sputtering of the growth engine in one of the fastest growing economies of the world is hard to ignore.
The earthquake and tsunami in Japan caused destruction of $25 billion, causing its GDP in the first quarter of 2011 to fall by almost twice of what expectations were. Subsequently, Bank of Japan slashed its growth forecasts for 2011-12 to 0.6% compared to a forecast of 1.6%. Economic turmoil in Japan does not bode well for many of its trading partners, China and US being the biggest ones.
Where does India fit into this big picture? Stubbornly-high inflation and a persistent clawback in FDI have resulted in dampening India's growth prospects in the short term. In addition, the recently-released IIP data bears sign of slowdown in manufacturing. Although the service sector continues to remain resilient to the global uncertainties, the bleak prospects of the global economy are bound to impact this sector sooner or later.
Very little is being done to improve India's global competitiveness and other countries are effectively eating into the country's share of world trade. This is something to take note of. The recent trade and economic cooperation agreements with Singapore, Japan and Malaysia and the free trade agreement with the Asean are important steps for Indian businesses to capitalise upon and improve their productivity so that the economy can continue to expand its productive capacity.
But the tell tale signs are hard to ignore. There are clear signs that a hurricane or a tornado is taking shape in the distant horizon. It does not matter what the final form of the calamity is - if it strikes the global economy, the result will be a phase of acute slowdown, far worse than the impact of the financial crisis that the world just witnessed. When the collapse of a global bank created a contagion that shook policymakers across the globe, imagine what the impact of a nation defaulting on its debt obligation is likely to be.
It is okay to remain optimistic about economic prospects - after all, building and restoring consumer confidence is critical to avoid a self-fulfilling economic slowdown to manifest itself. But it will be a mistake to become complacent. Now is the time to frame policies to make India prepared to face the economic uncertainty that may be headed our way. Else, we will be left in a hole so deep that the abyss will be hard to fill for many decades.
Friday, 5 August 2011
US, Europe, Greece, Chinese economies struggle: How India can sheild itself from the impact
What are Mutual Funds and top 10 performing mutual fund
What are Mutual Funds?
Mutual funds is an investment vehicle that is made by pooling funds from investment in securities such as stocks, bonds, money market instruments and other similar assets. Mutual funds are operated by fund managers, who invest the fund's capital in attempt to produce capital gains. As the investment is made across a wide industries and sectors, the associated risk is reduced to minimum. Mutual fund is issued to an individual based on the capital invested. Investors of mutual funds are referred as unitholders.
The profit or loss in the investment is equally shared by all the investors according to proportion of investment made. Mutual funds are launched in form of schemes with different investment objectives from time to time. A mutual fund scheme should be registered with Securities and Exchange Board of India (SEBI).
Mutual Funds in India - History
The concept of Mutual Funds in India emerged as success as early as 1990s, when Government allowed public sector banks and institutions to launch mutual funds schemes. Unit Trust of India was the first Mutual Fund in India set-up in the year 1963.
Security and exchange Board of India (SEBI) act was passed in the year 1192. The objective of SEBI are - to regulate security market and protect the interests of investor community. It is regulatory institutions which is responsible for formulating policies and guidelines for operation of mutual funds in India.
The list of top 10 performing mutual fund companies is as follow:
1. HDFC Mutual Fund
Inception Date – June 30th 2000
Trustee – HDFC Trustee Company Ltd.
Top Performing Schemes – AUM as on 30th April 09
+ HDFC Top 200 (2338 cr)
+ HDFC Equity (2759.30 cr)
+ HDFC MIP Long-term (887.90 cr)
2. Tata Mutual Fund
Inception Date – June 30th 1995
Trustee – Tata Trustee Company Pvt. Ltd.
Top Performing Schemes – AUM as on 30th April 09
+ Tata Pure Equity (269.95 cr)
+ Tata Index Nifty (6.77 cr)
+ Tata Short-term Bond (292.08 cr)
3. SBI Mutual Fund
Inception Date – June 29th 1987
Trustee – SBI Mutual Fund Trustee Company Pvt. Ltd.
Top Performing Schemes – AUM as on 30th April 09
+ Magnum Contra (1,958.50 cr)
+ Magnum Balanced (333.11 cr)
+ Magnum Multiplier Plus (687.15 cr)
4. Reliance Mutual Fund
Inception Date - June 30th 1995
Trustee – Reliance Capital Trustee Company Ltd.
Top Performing Schemes – AUM as on 30th April 09
+ Reliance MIP (168.52 cr)
+ Reliance Banking Retail (681.25 cr)
+ Reliance Diversified Power Sector Fund (3809.57 cr)
5. DSP BlackRock Mutual Fund
Inception Date – December 16th 1996
Trustee – DSP Merrill Lynch Trustee Company Pvt. Ltd.
Top Performing Schemes – AUM as on 30th April 09
+ DSPBR top 100 Equity (1167.08 cr)
+ DSPBR Equity (919.77 cr)
+ DSPBR GSF Longer Duration (425.67 cr)
6. Kotak Mutual Fund
Inception Date – June 23rd 1998
Trustee – Kotak Mahindra Trustee Company Ltd.
Top Performing Schemes – AUM as on 30th April 09
+ Kotak Bond Reular (445.69 cr)
+ Kotak 30 (688.14 cr)
+ Kotak opportunities (658.50 cr)
7. Principal Mutual Fund
Inception Date – November 25th 1994
Trustee – Principal Trustee Co. Pvt. Ltd
Top Performing Schemes – AUM as on 30th April 09
+ Principal Child Benefit (19.81 cr)
+ Principal Index (21.88 cr)
+ Principal Personal Tax Saver (332.53 cr)
8. Sundaram BNP Paribas Mutual Fund
Inception Date – August 24th 1996
Trustee – Sundaram BNP Paribas Trustee Company Limited
Top Performing Schemes – AUM as on 30th April 09
+ Sundaram BNP Paribas taxsaver (703.54 cr)
+ Sundaram BNP Paribas Select Focus Fund (880.78 cr)
+ Sundaram BNP Paribas Bond Saver (59.12 cr)
9. Franklin Templeton Mutual Fund
Inception Date – February 19th 1996
Trustee – Franklin Templeton Trustee Services Pvt. Ltd.
Top Performing Schemes – AUM as on 30th April 09
+ Franklin India Blue Chip Fund (1642.87 cr)
+ Templeton IGSF PF (32.68 cr)
+ Franklin India Prima Plus (1153.20 cr)
10. Birla Sun Life Mutual Fund
Inception Date - December 24th 1994
Trustee – Birla Sun Life Trustee Co. Ltd.
Top Performing Schemes – AUM as on 30th April 09
+ Birla GSF Long Term (10.48 cr.)
+ Birla Frontline Equity (481.14 cr)
+ Birla'95 (127.12 cr)
Top 7 Ways to Invest Your Money Now for a Tension Free Life Ahead
You may be leading a happy life now. But do you see yourself happy once you are off the job? The fact is that most of you may not be! By investing wisely you can get the ball in your court. So how can you be a wise investor?
A wise investor is one who puts a share of today’s hard earned money in a money generating or multiplying scheme. Here is the list of most popular money investment schemes in India.
** Infrastructure Bonds
These are bonds issued by public financial institutions like IDBI and ICICI Bank. It can take form of shares, bonds or debentures. Unlike mutual fund bonds, the risk involved is less as the investment made are not market-linked. These are the perfect option for investors looking for to save taxes and invest in a diversified equity scheme.
Here it goes some features of infrastructure bond:
Lock-in period of 3 years
No tax saving in case money is taken back before the lock-in period
Less risk involved
Less dependent on market situation
** Home loans
Mortgages are an attractive way of investing as it gives two visible benefits. You can actually own a home by paying in instalments at the same time it provides huge tax benefits. With the real estate sector booming you can easily fetch double of what you have invested in a while.
Here are some key points why home loans are attractive than the rest:
Easy Availability from banks and other Financial Institutions
Tax concessions
Get tax deduction on repayment of the principal amount of a loan taken
Interest paid on a loan is deductible from income from the property
Interest paid on a new loan taken to repay the original housing loan is also allowed as deduction.
** Equity-Linked Saving Schemes (ELSS)
ELSS is a saving scheme that explores the power of equities. The amount that you invested in the units of the fund is invested in the equity shares of the companies. Of course the risk involved is high, yet it yields highest return closer to 47%. This investment option actually diminishes the chance of possible liquidity.
Here goes more on this high- return investment option:
Max limit is Rs. 1 lakh
Lock-in period of 3 years
Max returns even up to 47%
High risk involved
** Public Provident Fund (PPF)
PPF is an investment option that needs you to set aside some specific amount on a yearly basis. The best part is that you can even open one, even if you are not earning at all. PPF accounts can be opened at Head Post Offices or nationalized banks that handle PPF accounts.
Here goes a briefing of what all PPF has to offer:
Min limit is Rs. 500 and maximum limit is Rs.70,000.
Rate of interest is 8% p.a.
Spans for a min of 15 years
Restricted withdrawals, 50% of the balance standing at the end of the 4th year to be precise.
** National Saving Certificates (NSC)
NSCs are a saving scheme which appears like a lighter form of PPF. These are certificates issued by Postal department and government of India. The beauty of this scheme is that it combines growth in money and tax benefits. It can make Rs. 1000/- grow to Rs. 1601/- in six years.
Here goes more on this smart long term saving option:
Issued in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000
Duration is 6 years
High interest rate at 8% compounded half yearly
No prescribed upper limit on investment
** Life Insurance
Life Insurance schemes make sure that your loved ones can move forward with the life even when you can’t help them any more. Apart from this benefit that inherits, it offers tax deduction to you. Tax deduction means more money for investing. The life insurance policy is available from LIC and many private insurers.
Here it goes some facts about life insurance:
Maximum Tax deduction limit for each year is Rs. 1 lakh for insurance investments
Tax exemption for direct taxes and not for service taxes payable on insurance maturity
Premium paid in any year should not exceed 20% of the sum incurred
No deduction on any sum paid in excess of 20% of the sum incurred
** Unit-Linked Insurance (ULIP)
ULIP is basically a combination of investment fund and insurance policy which includes UTI & mutual funds. Hence you can enjoy the goodness of investment funds that yields more returns, along with the insurance cover in a single investment option.
Here goes more on ULIP:
Min limit is Rs. 15,000 with annual contribution of Rs. 1,000 and max limit is Rs. 2 lakhs with annual contribution of Rs. 20,000.
Your age should be between 12 and 55 years 6 months.
Exemption from wealth tax
Service tax may be charged since it gives insurance cover.
Happy Investing! :)